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Open source alternatives invade Microsoft's competitor list

Microsoft's list of competitors is growing to include more open source software and Web browsers as the company fights to stay competitive with distributed computing, emerging PC alternatives, browser-based cloud options and always-on connectivity.

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The company's annual Form 10-K filing with the Security and Exchange commission reveals that Microsoft has widened its list of competitors, especially in its all important client and server divisions, and in its business division that includes Office.

Form 10-K is an annual report to the SEC that provides a summary of a company's fiscal year performance. Microsoft's 2009 fiscal year ended June 30, 2009.

While competitive pressures are often oversold in 10-K reports, Microsoft's reveals that the company sees many more serious competitors pointing their market-stealing arrows at the software giant.

Microsoft acknowledges the changing dynamics in the PC market and growing demand from new devices and platforms could undermine the company's dominant product positions.

Microsoft added to its competitor list Canonical, which develops Ubuntu Linux, as a commercial software competitor on the client side. Red Hat and Apple are also on that list, but specific mentions of IBM and Sun Microsystems have been dropped.

Microsoft also has added acknowledgment that longtime partners such as HP and Intel “have been actively working with alternative Linux-based operating systems” and adding competitive pressure.

In addition, Microsoft has expanded its list of competitors to Internet Explorer to include Apple, Google and Opera Software, confirming its stated realization that open source software is posing a threat on many fronts. In last year's report, only Mozilla was mentioned as a browser competitor.

Microsoft cites the economy and the growing awareness of netbooks as fuel for the growing popularity of Linux. Microsoft for the first time also calls out Google Android as a competitor in the netbook market.

The report on competitors aiming at Microsoft Office, which seems to be perpetually under attack and more so now with online services coming into focus, includes Adobe and Zoho specifically but no longer Sun. Microsoft has added 37Signals, Adobe, ShareOffice and SocialText, to its list of Web-based competitors to Office System products.

On the server side, Microsoft has dropped a reference to VMware as a competitor to its server operating system, instead listing the company as a competitor to System Center in the server management and server virtualization areas.

Microsoft has also added a reference to Oracle to go along with IBM and Sun as competitors on middleware platforms that offer J2EE alternatives to .Net.

Oracle is set to acquire Sun for $7.4 billion.

Microsoft continues to list Novell, Red Hat, Apache, MySQL, PHP, JBoss, Geronimo and Spring Framework as server-side competitors.

Microsoft has dropped specific mention of BEA Systems, which was bought by Oracle last year, as a competitor to its software development tools, but has added to the list of “open source projects” PHP, and Ruby on Rails.

The list reinforces that open source is creeping further onto Microsoft's competitive landscape.

In other tidbits from the 10-K, Microsoft states that “approximately 50% of Server and Tools revenue comes from multi-year licensing agreements,” which is up from 45% in fiscal year 2008. In addition, the report shows that Microsoft now has 93,000 full-time employees as of June 30, 2009, a 2,000 person increase over the same date in 2008. The number is curious given that Microsoft in January said it had cut 1,400 people and would lay off as many as 5,000 as part of a first-ever wholesale labor reduction.

Microsoft also reported spending $925 million on nine acquisitions made in fiscal year 2009.

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